Since the early 1990s, Brazilian IT policy has changed substantially from greenhouse protectionism in selected segments of the market to a more liberal regime. This paper analyses the impact of liberalization on IT equipment production, diffusion, employment and foreign trade. There were both benefits and setbacks, depending on the aspect analyzed. Users benefited from greater access to imported equipment, which could eventually contribute to productivity growth in the overall economy. On the negative side, there was a loss of local linkages with internal sources of components, technology and employment. The paper concludes that the future of the Brazilian IT industry does not seem to be in commodity hardware production. Rather, it lies in design- and engineering-intensive applications. Such “production close to use” can spur domestic use as well as create business opportunities for domestically owned companies in markets not dominated by foreign multinationals.